In a divorce case, one of the most significant disputes involves the division of the couple’s property. Depending on how complicated the finances of the parties are, proceedings for determining the property distribution of marital assets upon divorce may involve some sophisticated legal and financial concepts. This blog looks at specific terms that are often used in property division matters in a divorce case so you can have a better understanding of what your legal rights and options are.
Under New York Domestic Relations Law § 236(B)(1)(c), “marital property” means “all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held, except as otherwise provided in agreement pursuant to subdivision three of this part. Marital property shall not include separate property as hereinafter defined.”
New Domestic Relations Law § 236(B)(1)(d) defines “separate property” to include the following:
- “property acquired before marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse;
- compensation for personal injuries;1Link to the text of the note
- property acquired in exchange for or the increase in value of separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse;
- property described as separate property by written agreement of the parties pursuant to subdivision three of this part.”
Property that qualifies as separate property is not subject to division upon divorce.
New York Domestic Relations Law § 236 defines “distributive award” to mean “payments provided for in a valid agreement between the parties or awarded by the court, in lieu of or to supplement, facilitate or effectuate the division or distribution of property where authorized in a matrimonial action, and payable either in a lump sum or over a period of time in fixed amounts. Distributive awards shall not include payments which are treated as ordinary income to the recipient under the provisions of the United States Internal Revenue Code.”
Distributive awards are appropriate when the equitable distribution of marital property is impractical, resulting in a party receiving more property than they should. Under a distributive award, one party compensates the other party for the excess value of the marital assets they receive. This is particularly appropriate when a business as a whole constitutes divisible marital property, but actually dividing the business would violate the law.
In general, the term “equitable distribution” refers to the system of rules that determine how marital property is divided between divorcing spouses. Courts have held that all marital property is subject to equitable distribution upon divorce. This does not necessarily mean that marital property is equally divided. Instead, courts will consider various factors to make sure the division of marital property is just and fair.
Property can either be characterized as “marital” property subject to division upon divorce, or “separate property” that is not divided between the parties in a divorce case. However, the parties can agree to treat an asset that would otherwise qualify as separate property under the law as marital property. Changing the separate character of an asset so that it is considered marital property is called a “transmutation.”
Fair Market Value
In cases involving the division of marital property, it is necessary to determine the value of assets such as real estate and business or professional interests. One way to establish an asset’s value is to provide evidence of what buyers in the market for that particular asset would pay to acquire it. This is known as “fair market value.”
When determining the value of marital property for purposes of equitable distribution, evidence of its “replacement value” may be used. The replacement value of an asset is based on the cost it would take for someone to replace the lost item. This valuation method is particularly useful for fungible, mass-produced property, like electronics and furniture.
Call the Law Office of Tzvi Y. Hagler, P.C. for More Information
Divorce issues, such as the equitable distribution of marital property, may be almost impossible to figure out without the education and experience of a licensed attorney. If you have questions about your marital property rights, you should consult the Law Office of Tzvi Y. Hagler for legal advice and advocacy.
Call (516) 514-3868 or complete this online request form to schedule a consultation about your case today.